Heelys: A Chance to Get Off the Fad Rollercoaster
August 14th, 2008 | Posted by stockWhat happens to a fad stock when the fad fizzles?
Maybe they just fade away. Or maybe they get acquired at an 85% discount.
Skechers (SKX) is offering to buy shoe company Heelys (HLYS) for $143 million, giving Heelys’ investors a chance to cash out of a company that is nothing if not a fad stock.
The firm makes kids’ shoes that contain hidden wheels in their soles. You’ve probably seen little ones rolling, not walking, down the sidewalk, through the mall, or even down subway platforms (yes, I’ve seen this, as dangerous as it sounds).
Driven by kids’ craze for their shoes, the company successfully went public in 2006. Shares rolled higher, and then thud. Last summer, the stock market realized what any parent or elementary school teacher already knows: Kids are fickle.
By now, the Heelys craze seems a little long in the tooth, and the company has the financial results to prove it. The firm recently reported revenues of just $18.2 million last quarter, down from $74.3 million a year ago. Last year’s profits of $12.8 million turned into a $394,000 loss. Shares are down about 85% in the past couple years.
Heelys’ plight reminds me of another shoe company (once) popular with the kids, Crocs (CROX). On Aug. 8, Crocs said it was laying off 4% of its work force, one day after reporting very weak financial results. Sales at the company mostly held steady, but domestic sales plunged 20% from a year ago, a sign of waning interest in Crocs’ super-comfortable, but super-ugly footwear.
Ron Snyder, Crocs’ president and CEO blamed a “difficult macro-economic environment,” and said he was “confident about the strength of the Crocs brand.” Crocs seems to be hoping new, more stylish shoes will reignite consumers’ interest, but investors have clearly lost patience.
Once a red-hot stock touted by analysts as the next Nike (NKE), Crocs shares are down 94% from their peak. (Here’s more on Crocs, which in May, in a post titled “Where were the analysts?”, I called “a classic tale of stock market hubris.”)
So why would Skechers be interested in Heelys if it represents a faded fad?
“At first blush we were scratching our head at this deal,” wrote Sam Poser, a Sterne Agee analyst.
But, reflecting its weak growth prospects, Heelys is cheap. And with $96.7 million in cash, the real purchase price would be about $48 million, Poser says.
Also, Skecher’s CEO said in a letter to Heelys he is impressed by “Heelys’ strong brand and proprietary technology.” The technology (Heely’s patents) may be the key ingredient here.
Skecher’s “kids’ business is strong, and [Heelys] could be a good addition, despite the recent slowdown.”
Initial reports suggested Heelys would reject the Skechers’ bid (as the firm rejected proposals earlier this year). Perhaps Heelys execs are holding out for a higher price or maybe, like Crocs, they think new products can revive the firm’s stock.
Both Heelys and Crocs have two advantages that might be attractive to larger acquirers: Lingering popularity (particularly abroad, where their fads haven’t completely played out) and some fancy technology.
Their shareholders have been on a crazy trip lately, and these advantages just might give them a chance to get off the rollercoaster ride.
August 13th, 2008 | Posted by stockThis study is the latest suggesting that technical analysis provides little value to traders and investors.
For those who don’t know, technical analysts give advice on buying and selling by ignoring fundamentals (such as the earnings power or a company, for example) and instead focusing almost entirely on an asset’s price movement in the market. It can get very complex as technicians puzzle over 200-day moving averages and look for particular shapes in stock charts (like the supposedly promising “cup and handle” that Investor’s Business Daily founder William O’Neil loves.)
(If you want to learn more about technical analysis, this Investopedia page might be helpful.)
The study focused on global stock markets. From the abstract:
While we cannot rule out the possibility that technical analysis compliments other market timing techniques or that trading rules we do not test are profitable, we do show that over 5,000 trading rules do not add value beyond what may be expected by chance when used in isolation.
The CXO Advisory Group blog has good summaries and analysis of this study, and a previous study that focused on U.S. equities.
As a reporter, I talk to technical analysts all the time. I find them very useful. Yes, their predictions are suspect, but so are all predictions. Technicians can be valuable because they often do a good job describing what’s happened in the stock market in the past day or week or month.
They keep close track of volume and price movements, which means they know where the money is flowing and how enthusiastic buyers are or how pessimistic sellers are. That helps give real insight into the shifting moods and strategies of the investing community. But it’s a way of looking back, not forward.
What do you think of technical strategies? Unfortunately, saying “they work for me” isn’t proof that they do work — it might be proof you got lucky. But many investment houses keep technical strategists on their payrolls, so maybe, despite academic studies to the contrary, there is some value in this sort of analysis. I would love to hear your thoughts.
Tropic Thunder’s Perfect Storm of Cross-Promotion
August 13th, 2008 | Posted by innovRegular broadcast advertising is just not what it used to be. While ratings numbers decline due to time people spend online or on their cell phones, people who do watch TV may record and fast-forward through commercials or watch shows on DVD, seriously diminishing the impact that ads will have. Additionally, grown men are using their TV for more than just cable programming. Video games today are a huge part of the entertainment landscape.
A generation of gamers are all grown up and they’re not playing NES games anymore. Many feel the nightly call for an online shooter title of some sort, and for many of these gamers, they’ll buy and play a game religiously for months with their buddies. In order to reach this new generation of consumers, advertisers will not only have to look toward games, but also integrate with them to get a level of engagement that will get these players’ attention.
Enter Massive, Microsoft’s in-game advertising company. They’ve finagled a deal to put a scavenger hunt relating to the movie Tropic Thunder in Tom Clancy’s Rainbow Six Vegas 2. We talked with Jay Sampson, VP of global sales for Massive, about this new “player initiated” in-game promotion.
Viva In-Game Ad Promotion
In order for something like this to come to fruition, all of the parties really needed to come together. It’s not simply a case of Massive proposing the idea; Paramount had to be on board with using their movie and Ubisoft had to be fine with such a large integration within their game. In the end, everyone was enthusiastic for the idea, truly creating a “perfect storm” for the promotion.
“It was really the brainchild of Ubisoft and them working with our integrations team and sales development team,” explained Sampson. “We assess every title on our network for ad relevance and work with the publishers to make it happen. If [a game is] set too far in the future or is historical or is a fantasy piece, we pass on it. Assuming the game can be integrated with ads, we look for placements that work in the game’s environment. We’re looking to not over commercialize the game—we’re looking to find the best placements in the game. As we look at it, we want to put in about five to six minutes of ads for every hour of gameplay that players experience. The reality is that we want placements that catch the player’s eye and don’t saturate the environment.”
“Through the integrations we’ve already worked into the game, we’ve tagged placement for ads before hand; we didn’t have to re-architect the game at all,” he continued. “Ubisoft worked with ad packaging on the idea—we just had to put together a series of events that was compelling to the gamer and the marketer as well, and it just works well for the SKU. In all ways, it worked out perfectly.”
I’m the dude playing the dude disguised as another dude!
For those that haven’t seen any trailers or ads for the movie, Tropic Thunder is a comedic film about prima donna movie stars filming a Vietnam War movie and being dropped into the middle of a real, contemporary conflict. The movie’s setting, and its target demographic, mesh well with Rainbow Six Vegas 2.
“It makes such a good fit for Paramount because of the way the movie and game match up,” commented Sampson. “Promotions like this can be done in numerous markets; this could be done in consumer package goods to soft drinks. [Paramount] is one of our first advertising partners and one of our most consistent customers. The stars aligned, the Paramount team loves innovation and firsts and trying new things and then also Ubisoft has been one of our best if not most progressive publishing partners. I think we’ve carried six Clancy games, and it’s because they not only create great games, but also because they’ve been early in their adoption of dynamic ads.”
“As I mentioned earlier, we worked with the studio to find the right placements for ads beforehand,” he detailed. “We’ve constructed a series of events in the game where you get nine inventory elements from nine different billboards.
The first one has a general call to action (featuring Tropic Thunder branding, of course) and the ‘game-within-a-game’ follows through various levels and sequential billboards to see the next clue, and after eight of them, they get to the final billboard and they get things to their email for the prizes. You want to have a payoff for a ‘game-within-a-game’ and there are small and big payoffs, between a free map, tickets to the movie, merchandise and a free Xbox 360 Elite system. Gamers love free stuff and whether it’s a t-shirt pack or a grand prize, it’s pretty cool to get.”
Who’d think to make things in games interactive?
The main benefit of this promotion for Paramount is that it draws in players voluntarily, letting them “pull” it towards themselves rather than having ads “pushed” on them. Players are rewarded for following Tropic Thunder clues with an in-game map and potential for greater prizes. It’s really a true win-win for all parties in the case of this ad campaign.
“Interactivity is, of course, a central component to gaming,” agreed Sampson. “If you’re playing Madden and you see the Reggie Bush Adidas ad, you’re probably going to associate those two things and maybe become more interested over time. But in this case…. you’re going to be more interested because of the amount you’re engaged with the promotion. I think thematically [Tropic Thunder in Rainbow Six Vegas 2] makes sense, and it should be a blockbuster film, so [players likely] already know the movie, and the creative is artful enough that it will draw you in and when you get to that conclusion, you’ll get the payoff.”
“The benefits for video games is that they are very engaging; gamers are totally locked in while they’re playing,” he added. “We’re trying to make it very turnkey to place advertising and take the heavy lifting out. Normally, you’d have to talk to the publisher 12 to 18 months in advance, which doesn’t lend itself to a movie launch. Nowadays you can get UI up in a matter of days for an audience that just keeps on growing.”
“Massive represents things on Xbox Live and PC and hopefully it will do mobile in the future. We have spent a fair amount of time working with publishers to use the best of their programming when the game is ad relevant. We’re hopefully constantly evolving the medium and do it more artfully than the competition, pushing it in a positive way. We’ll look to do more of these sorts of promotions where it makes sense from a relevancy perspective. We’re not going to put ads in games that are not relevant and pertinent. We’ll probably do more promotions even in Rainbow Six Vegas 2 along with other games. It’s an example of how far [the ad medium has] come and it is a sign of future things to come,” he concluded.
Competing in the MultiPolar World
August 12th, 2008 | Posted by innovBusiness and political leaders tend to agree on very little, but there is a consensus that we have entered a new, “decentered” world. Some call it a “nonpolar” world. Others hail “the new Asian hemisphere.”
My colleagues and I at Accenture (ACN) call this new era the “multipolar world”—a world of dynamic shifts in power and influence.
As we travel the world, helping our clients in myriad industries compete as effectively as possible, we both observe and are contending with two issues over and over again. The first issue is readiness—how prepared are companies and organizations in the developed world to compete and win on the key battlegrounds for customers, talent, innovation, resources, and capital. The second issue is the pace of change—the speed with which these shifts in power and influence are occurring.
Readiness and Pace
Everywhere I see the confidence and swagger of resource-rich nations going global. For example, in Africa, I see increasing mobile connectivity. India and the Philippines are experiencing a burgeoning of technical talent. In Korea, Singapore, and across Eastern Europe, there are huge investments in R&D and innovation; and then there’s the increasing influence of sovereign wealth funds—many of them in Gulf States—in a credit-crunched world hungry for capital.
My Accenture colleagues and I routinely ask ourselves:
• How much do organizations headquartered in North America understand about this rapidly changing business landscape?
• Are they building these insights into new offensive or defensive strategies?
• Are they as ready as their counterparts in Europe, Japan, or elsewhere in the developed world to compete in this new game?
• Or do they need to work much harder to have the right feel for their new customers and consumers, the right cost-competitive business models for the cut and thrust of new markets, and the right global leadership mindsets?
The answers change as quickly as the questions. But this is what we know about the multipolar world:
• The gross domestic product of the developing world has grown to 48% of global GDP, up from 38% in 1990. Data collected by the Economist Intelligence Unit predicts that it is likely to surpass the developed world within the next decade.
• Emerging-market companies now account for 78 of the Fortune Global 500 list of biggest corporations.
• The largest sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA), controls up to $900 billion in assets, according to a March 2008 report in The Guardian. Singapore’s Government Investment Corp. has assets of more than $330 billion.
• In its report Science & Engineering Indicators 2008, the U.S. National Science Foundation has found that there were 442,468 Chinese graduates in engineering. The U.S. was far behind, with 64,675 graduates.
• The International Telecommunications Union reports a 414% increase in the number of Internet subscribers in Asia from 2000 to 2007. Globally there’s been a 245% increase in the same period. China Mobile reports that it adds 6.5 million new subscribers every month to its existing subscriber base of over 400 million.
Globalization is no longer a one-way street where developed-country multinationals export their products, services, and business models into emerging markets and view these new regions merely as sources of low-cost manufacturing. For much of this decade, factory workers in China, Mexico, Vietnam, and other cheap-labor countries couldn’t afford the goods they were producing.
But those days are over. Almost overnight, the middle class has gained critical mass in emerging economies. By 2010, there will be 83 million middle-class households in China and an additional 40 million in India—more than the total for the U.S. This new middle class has disposable income to buy cars and computers.
It is highly educated, typically multilingual and increasingly both confident and ambivalent about traditional Western values and aspirations.
A recent Accenture study looked at workers’ readiness to succeed in the business world by 2011. We found that 68% of businesswomen in India, 63% in South Africa, 61% in China, and 52% in Brazil feel equipped to succeed. By contrast, only 46% of American women and men feel they’re ready to do business in a more global business world.
Mobile Phones in Africa
I experienced the full brunt of this new era a month ago when I zigzagged across three continents—from my home outside London to Tanzania and South Africa, on to Denmark, then to Boston in the U.S., and back home again.
In Tanzania and South Africa, I was impressed by the pace at which innovation in financial services is taking off with the use of mobile phones to make micro-finance loan payments. In Mwanza, in the middle of the African bush in Tanzania, the sole advertisement in the provincial airport was for free mobile roaming in China—clearly targeted at visiting Chinese mining engineers.
When I met with clients and colleagues in Denmark, I was fascinated to see how well Danish companies are doing in their global competitiveness and outlook, with leading positions emerging in green technology R&D, for example. On the other hand, they have comparatively little penetration in China and India, where their brands are less well-known and they struggle to attract talent. They are being forced to learn what “employer branding” means when your potential workers have not even heard of your company.
The Threat of an Inward Focus
Back in the U.S., I met with leaders from the retail, consumer goods, automotive, and financial services industries. All of these sectors are feeling the pinch from the sub-prime mortgage crisis and the resulting credit crunch. Not surprisingly, they are trying to shore up their domestic business with customer incentives, new product and pricing approaches, and cost management strategies. One of the dangers of the current situation, however, is the potential that the fixation on inward-looking strategies is distracting Corporate America just when it needs to be most focused on global opportunities and threats.
We have already seen sovereign wealth funds taking positions on Wall Street—even buying a large share of New York’s Chrysler Building. But what would happen if, for example, a Chinese bank bought a North American bank? We have witnessed the impact of Indian steel and automotive companies bringing their cost structures and assumed business models to bear on developed-country companies. We have similarly seen Latin American mining giants transforming their overseas acquisitions. The need to benchmark the underlying performance and profit drivers of these new champions as a stimulus to transformational change in the old champions is clear.
Tackling Emerging Markets
Similarly, as we fight to sell cars to a shrinking and aging demographic, what about the new markets around the world where car purchasing is exploding? North American companies such as General Motors (GM) have had success in breaking into these markets but the concrete is setting fast on brand awareness, distribution channels, and customer loyalties in the emerging world. Ensuring that a sufficient amount of corporate mindshare is targeted at emerging-market opportunities in these challenging times is important.
We all know the stories from the past 50 years of business success and the role that inspirational CEOs and leaders from the U.S. have played. The new leaders of the next generation of successful multinationals will need to be even more globally aware and well-traveled, with deeper experiences working in more diverse environments. This is something my Accenture colleagues are focused on with proactive leadership development and global mobility programs that provide greater opportunities for Accenture employees to enhance their career experience through cross-border and within-country assignments.
The Way Ahead
Of course, corporations based in the developed world aren’t the only ones coping with multipolar interdependences. In future columns, I will discuss the repercussions of the boom in emerging-market mergers and acquisitions and the accompanying squeeze on managerial talent as well as how the ripples of the economic downturn in the U.S. are affecting these new markets.
In our new multipolar world, there are many North American corporations that are leading the way in the development of new global marketplaces. They have developed sophisticated and flexible operating models to balance being “super global” with being “super local.” There are globally experienced teams with a clear strategic perspective on where to place bets and take long-term risks abroad while at the same time nurturing home markets.
Accenture is helping many of these organizations as they navigate this complex environment. We are learning a lot and I look forward to sharing these insights with you in future columns.
Why the Pressure to Innovate Won’t Stop
August 12th, 2008 | Posted by innovWe’re now into an era where new products and innovations (BusinessWeek.com, 6/17/08) are seen as smart investments. Some context will show that:
• This wasn’t always the case;
• It took us a long time to finally come to this point, and
• The demand for NEW isn’t going to slow down any time soon.
First the context.
In the 1950s, mass marketing was driven by the mass media—more specifically, television. All you had to do was produce a product, put it in a tube, and advertise it on the tube. It sold incredibly well.
Starting in the ’60s, we saw the concept of segmenting introduced, driven in large part by a statistical technique called cluster analysis. In cluster analysis, you survey people about their needs, wants, and desires and then literally cluster the results based on the pattern of response. Everyone who responds the same way is put into one cluster. At the end of the process, you’d have four, five, or six clusters, and then you set out to create products designed specifically for each one.
So companies like Procter & Gamble (PG) would create products geared to people who wanted brighter, whiter, or softer clothes. Once the need was identified, a product would be launched to meet the need. Often these products were seen as revolutionary, e.g., Downy fabric softener, launched in 1960.
The 1970s were the heyday of new products and new product marketing, in large part because:
• We had identified all these segments through cluster analysis and
• We had more sophisticated tools—such as simulated test markets—to help predict demand.
Thanks to simulated test market research, you can: sample a group of people in your target market, show them an ad which causes them to buy, and then you can forecast from their reaction how well the product will sell out in the real world. So in addition to Downy, we got Bounce fabric softener sheets in 1972.
For much of the ’80s, the stock market was soaring, so it was cheaper to acquire (using your stock) someone else’s brands than it was to build your own from scratch. The rationale became that the brands themselves had value—which, of course, they do. So during the ’80s we got all these mergers and acquisitions and the notion of brand equity emerged. In the process, we took our eye off the idea of innovating internally.
In the ’90s the worm turned, and it became all about cutting costs and eliminating people. Creating a new brand completely from scratch was seen as too costly and too hit-or-miss, so the focus switched to line extensions, which are seen as having less risk. Line extensions are products that are new, sort of, but you are not spending huge sums to create them, which makes the people in the finance department happy. Instead of brand-new technology, we often get a new flavor or combination of benefits that were already on the market. After all, who doesn’t need whitening AND freshening with his Mint Blast toothpaste?
What’s important to note is that when you extend the line, you stretch the brand, and in the process you begin to sap its value. If you had started with a soft drink product that had started to build some equity in the marketplace, and then you come out with a diet version, and a no-caffeine version, a zero-calorie version, and several flavored versions, the value of the original soft drink itself decreased by the time you were done expanding it to death. You had undermined the very value of the original product. And that was the net result of all the cost cutting and brand extensions that we saw in the 1990s.
So, we had more than two decades where innovation wasn’t valued, first because it was cheaper to acquire a brand than build one, and then because it was seen as far riskier than brand extension. But we have finally gotten to the point where there is nothing more to wring out of existing products. And that is why innovation is once more—correctly—seen as important and will remain so in the immediate future.
August 12th, 2008 | Posted by stockWhen people make predictions about this stock market, I don’t know whether to congratulate them for their boldness or question their sanity.
Still, Jeremy Siegel — the famous Wharton School professor — says stocks reached a “selling climax” on July 15, which he believes will be seen as the bottom for the current market.
Meanwhile, this WSJ article quotes Thomas Lee, an equity strategist at J.P. Morgan Securities making a similar prediction. He “thinks stocks have seen their lows, thanks partly to retreating commodity prices,” Tom Lauricella writes.
Floyd Norris suggests the recently crazy volatility in the stock market might be one sign stocks have hit bottom. He writes:
This kind of wild volatility is often seen near market turning points, although this volatility is not quite the equal of what we saw as the 2002 market low arrived.
“Random” Roger Nusbaum thinks stocks “may drop more,” perhaps not turning higher until the first quarter of 2009. However, he wisely notes:
There will be a bottom at some point, maybe when I think it will come or more likely at some other time and then there will be a new bull cycle of some sort.
Though he’s not ready to buy yet, Roger spends the rest of the post showing he’s made some serious plans for which stocks and sectors to buy when he thinks the time is right.
The bottom might have been in mid-July, or it might be in mid-2010. But Roger’s right: Eventually, it will come.
Evidence suggests there is a lot of money sitting on the sidelines these days. I assume many other investors have planned their shopping lists as carefully as Roger has.
If so — and if the economy and the market give investors sufficiently clear signs of hope — the new buying power in the market could lead to a quick, ferocious rally for certain stocks. But how long will investors have to wait (and how much more will they have to lose?) until then?
New Wines from the Screaming Eagle Folks
August 7th, 2008 | Posted by innovAs many wine insiders know, Screaming Eagle quickly became the priciest and dearest of the cult cabernet sauvignons from Napa Valley. That winery was sold several years ago to a syndicate owned primarily by Charles Banks and Stan Kroenke. Screaming Eagle continues to be a benchmark reference point Napa Valley wine, but the newest venture from Banks and Kroenke is Jonata, a fabulous vineyard north of Santa Barbara in the Santa Ynez Valley.
Working with a fabulous team of winemakers led by Matt Deiss, Jonata’s 2004 debut vintage was somewhat a work in progress. The 2005s and ’06s, however, have convinced even the most doubtful wine enthusiasts that compelling wines are emerging from this Santa Ynez vineyard of just under 100 acres. The wines are not cheap, but high quality and limited quantity never are.
Following is a look at some of Jonata’s sensational upcoming releases. (The winery’s telephone is 805 564-8581.)
90 points
2006 La Flor de Jonata Santa Ynez
Fashioned from 100% sauvignon blanc, the outstanding 2006 La Flor de Jonata exhibits abundant quantities of honeyed grapefruit along with a hint of underripe pineapple, and good mineral quality in a medium-bodied, zesty, fresh, white Graves-like style. Enjoy it over the next three to four years. $75
93 points
2006 La Tierra de Jonata Santa Ynez
There is 20% syrah in the 2006 La Tierra de Jonata, but it is dominated by sangiovese. It reveals classic sweet strawberry and raspberry notes intermixed with tobacco leaf and soil undertones. Medium- to full-bodied with supple tannin as well as beautiful freshness and vibrancy, it can be drunk now or cellared for five to seven years. It is easily the most accessible of the Jonata big reds. $75
94 points
2005 La Sangre de Jonata Santa Ynez
This 100% syrah offering exhibits an inky bluish purple hue along with a stunningly pure nose of melted licorice, meat juices, blackberries, pepper, and a hint of balsamic. It is a wine of extraordinary density, richness, high tannin, beautiful purity, laser-like acidity, and superb texture as well as length. This remarkable syrah is both powerful and elegant. Give it several more years of bottle age, and consume it over the following 10 to 15 years. $125
94 points
2006 La Sangre de Jonata Santa Ynez
The 2006 La Sangre de Jonata reveals bacon fat, pepper, and meaty notes, but not as much intensity as the 2005. Nevertheless, this is a concentrated, full-bodied effort with fabulous fruit purity, good acidity, and an unmistakable syrah personality that combines the best of French savoir faire with California fruit. It is a stunning effort from a challenging vintage. Drink it between 2009 and 2020. $125
94+ points
2005 El Desafio de Jonata Santa Ynez
Made from a classic northern Médoc blend of cabernet sauvignon (93%) and merlot as well as petit verdot, this 2005 boasts an inky purple color as well as a moderately intense nose of forest floor, earth, blackberries, crème de cassis, licorice, and incense. Full-bodied and powerful, with high but sweet, well-integrated tannins, the wine builds incrementally on the palate, but displays wonderful freshness, vibrancy, and precision. A tour de force in winemaking, this full-bodied red should drink well for 15-plus years. $125
95 points
2006 El Alma de Jonata
Perhaps the greatest cabernet franc being made in California is Jonata’s El Alma de Jonata. The amazing 2006, a blend of 95% cabernet franc and the balance cabernet sauvignon and a dollop of merlot, tastes like a liquid version of haute couture from Chanel. It possesses nobility, grace, and remarkable complexity. An inky bluish purple color is accompanied by an extraordinary bouquet of blueberries, black raspberries, and graphite. In the mouth, it reveals wonderful elegance, precision, and laser-like focus along with noteworthy density and intensity for a wine dominated by cabernet franc. The wine’s superb balance, purity, and well-integrated oak, acidity, and tannin are admirable. This beauty should hit its prime in two to four years and last for 15 to 20. $125
95 points
2006 El Desafio de Jonata Santa Ynez
A blend of 84% cabernet sauvignon, 9% cabernet franc, 6% petit verdot, and 1% merlot, the 2006 El Desafio exhibits a beautiful blackish-purple color accompanied by stunning aromas of crème de cassis, graphite, camphor, and incense. It possesses tremendous intensity, beautiful sweet fruit, full-bodied power as well as purity, and a finish that lasts some 45 seconds. This amazing effort is the greatest cabernet sauvignon-based wine ever made in the Santa Ynez appellation. It should drink beautifully for 10 to 20 years. $125
96 points
2006 El Corazón de Jonata Santa Ynez
A blend of 39% syrah, 35% cabernet sauvignon, 11% sangiovese, and the rest petit verdot, cabernet franc, and viognier, this 1,000-case cuvée offers profound, sexy aromas of smoked duck, soy, blackberries, pepper, and a hint of spring flowers. The sumptuous aromatics are followed by an exotic, full-bodied, voluptuously textured wine bursting with complexity and richness. A subtle smoky, meaty component is noticeable in the deep, dark blackberry flavors. Long, rich, and pure, this stunning 2006 should drink beautifully for 10 to 15 years or more. $125
JCPenney Targets Girls with Games
August 6th, 2008 | Posted by innovConsumers are becoming more evasive by the hour, it seems. What could easily be achieved with a simple purchase of cross-platform media is not nearly as effective anymore, as people spend more and more time on their cell phones and their laptops, which present a wide variety of ways to kill time. This truth is more applicable the younger you go, with teenagers being perhaps the most mercurial.
The JCPenney corporation knew this when they wanted to introduce a lineup of products for incoming college freshmen. The department store chain has sponsored the Academy Awards before, and that’s all well and good for some audiences, but not the one they wanted to target for this campaign. So JCPenney turned to EVB and spread their message via the web and, ultimately, an advergame.
We talked with Kim Kline, EVB’s VP of Account Management & Planning, and Ruby Anik, SVP of Brand Marketing for JCPenney.
JCPenney Gets Wired
JCPenney is among the older and better known department store chains in the U.S. The company has changed much over the decades, starting as a dry goods store in the early 20th century, and now it’s known for brands like St. John’s Bay and Arizona Jean Company in the early 21st century. Still, despite the changing brand orientations, JCPenney has always been more associated with moms as opposed to their teenage daughters, but the company is looking to alter its image to make itself more friendly to the late teenage set.
“[JCPenney] had been looking for a partner to work in the digital space,” said Kline. “Most of the companies they had gone to said, ‘Here’s the widget, here’s your MySpace page and you’re done.’ Ultimately, they reached out to us because we think there’s a lot more you can do to engage your target and there’s a wealth of techniques to leverage. When college age girls leave home, it’s an exciting time for them where they get to meet new people and see new things, but at the same time, they also need furniture and other stuff, and that’s where we come in. We pitched six ideas for connecting to young women and we think they all went beyond just a regular Facebook app. Dork Dodge was the only game-like one, but when we tried it out, the testers loved it.”
“To create Dork Dodge, we actually started from our young adult target’s vantage point (ages 17-19) and researched insights into what type of an engagement a young female consumer would find both entertaining and humorous,” commented Anik. “We wanted to create something for her that she would feel strongly about and want to pass along to her friends. In fact, as part of the development, we briefed a test group of young women on our four initial marketing ideas, and Dork Dodge was by far their first choice.”
“We decided to place the Dorm Life brand’s interactive page on Facebook rather than build a traditional micro-site for the same reason,” continued Anik. “The focus is to offer females something that is fun and relevant. In this case, she chose an interactive game, and we’re very excited to deliver that experience for her to enjoy and share. As future opportunities emerge, we’ll certainly look at games as one of a number of options to engage with our younger customers in a relevant way that is on their terms.”
See a need, fill a need
Of course, the push behind launching the Dork Dodge game online wasn’t for kicks and giggles – it’s part of JCPenney’s campaign for their new “Dorm Life” brand. This “lifestyle brand” is designed to appeal to fashion and price conscious freshman women, who are looking to “express themselves” with new clothing and furniture. Incoming college females is probably a smarter target than males, since guys of that age often look to the thrift store for clothes and to things like plastic crates and cinderblocks for furniture.
Our goal is to position the ‘Dorm Life’ lifestyle brand as a relevant, attractive resource for young adults as they graduate from high school and head off to college,” described Anik. “For many of them, this is a first opportunity to define themselves among new college friends, and through decorating their rooms, they can express their personal style and connect with others. At JCPenney, we want to be viewed by college-bound women as a relevant contributor to a very exciting time in their lives.”
“We were absolutely targeting females with Dork Dodge. The first year you come into college is when you’re going to buy the most of your stuff. Typically, when [girls] think of brands of high style, they don’t usually put JCPenney in the top 10, since it’s such a ‘mom’ brand but we’re looking to change all of that,” explained Kline. “EVB’s very oriented towards listening to what young people want. There are a lot of people that I reach out to get their opinions, and we asked the girls about what they wanted. To them it’s all about their own style and dealing with things on their own terms. We’re big into engagement, and we wanted something with significant content that [a girl would] want to involve a friend with. We use it as a hook to promote JCPenney products.”
I made a mix tape of my mixed emotions!
The main part of Dork Dodge bears a passing resemblance to the online social site Habbo Hotel. Interacting with the dorks, however, takes the form of a video. The various personalities in Dork Dodge had us men fluctuating between laughter and cringing because of their accuracy.
“It’s very indicative of the men you encounter and we think the video format is critical to conveying the site’s message. We actually ended up casting off of Craigslist; 80 people came in and did the characters and it ended up being very economical,” said Kline. “The team that worked on it were all women, and we all had clear memories of going to college for the first time.”
By contrast to many twitch-based advergames, actions in Dork Dodge are determined by choices made in a pop-up menu. In general, the way you blow off the dorks is very passive-aggressive as well, between giving out fake email addresses and the like. These elements struck us as being very particularly female, and Kline assured us that was not a coincidence.
“Women designed this for a teenage girl’s brand; we felt it had to be very female,” said Kline. “We ran a few other ideas for incoming freshman girls, like what if you got a creepy roommate? Ultimately, this one centered around the men you might encounter really clicked , and I think the game functionality raised it above the others. It really clicked with that generation of girls; what you’re seeing is more women do gaming [today]. We find women that want to interact with each other online and be helpful or send emails out to each other.”
It’s all about reaching customers on their terms
Dork Dodge is a sign of how things are changing in the advertising front. JCPenney, almost as old and conservative a department brand as there is, is turning to the web, and games in particular, to try and draw out new female customers. As movements like this continue, brand marketers will have to seriously rethink how to reach their consumers.
“[JCPenney] deserves a lot of credit for doing this to try and change perceptions. It had to be something that went to where the consumer is; I give them a lot of credit for doing that. I think this is going to be the beginning of a trend,” detailed Kline. “We have so much data that says they’re living online. There’s now a whole new consumer out there that experiences things in a completely different way.”
“Companies are saying they aren’t getting impact with their TV spots or magazine ads anymore; we tell them it’s not about putting up big stop signs anymore, it’s about getting in there with the consumer on their level; the brand doesn’t belong to them, it belongs to the consumer. The days of buying a million impressions is over; these are the days of buying a hundred evangelists that influence a million for you,” concluded Kline.
Plenty More Gloom and Doom Ahead
August 4th, 2008 | Posted by stockWall Street keeps wishing that problems in the economy and financial system would at least stabilize. Stocks rally every so often on hopes that an end is in sight and a rebound is around the corner.
Three groups of experts crunched the data and issued reports today. All three warn against premature optimism.
Stifel Nicolaus (SF) analysts say home prices should be expected to fall 28% from peak to trough, a bottom that won’t arrive until late 2009. Expect no rebound “for the next three to five years.” They added:
This is the unfortunate consequence of a full decade of overbuilding combined with perhaps the easiest credit environment in history. This was the backgrop for mutually reinforcing factors that drove unsustainable bubbles that will take years to deflate, in our view.
(The report, “Six Degrees of Housing Mayhem,” was written by Michael R. Widner and Chris Brendler.)
And it’s not just the U.S. that’s the problem. Steven Weiting of Citigroup (C) wrote today: “A more clear global slowdown is evident to us, not just in financial markets, but in real economics activity. The weakest readings are still to come.”
Meanwhile, Goldman Sachs’ (GS) Jan Hatzius is worried about a “vicious cycle between lower credit supply, a weaker economy, rising defaults, and yet more balance sheet strains” — with those balance sheet problems caused by the housing downturn. Hatzius expected total mortgage credit losses to total $500 billion, but he added:
We’ve seen announcements of over $400 billion already, without any evidence that we’re close to the end. Much will depend on how far further home prices decline. … We continue to expect another 10% home price decline over the next year or so. This suggests that the losses will likely continue to pile up.
For more on the home price issue, check out Prashant Gopal at Hot Property on whether the hard-hit California real estate market might be the first to hit bottom.
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